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Discussion Starter #61 (Edited)
I doubt the insurer will care much about my last 2 years of taxes, which were under an employer that I am no longer with. Maybe I'm wrong... do they only care what the tax returns say? I can show them tax returns with 2 years of high income. IMO not relevant to my income going forward but maybe they don't think that way.

And you guys are talking 4K to 5K a month disability but even my professional association's insurance would pay nothing near that. The professional association quoted me a policy with max $1500 a month (due to self employment) which is why I figured DI is out of the picture.

Not to mention the fact that DI can be turned off once the insurer determines you're good enough to work. The benefit I see with CI is the lump sum payout, meaning you can rest and recover on your own schedule... not the insurer's.
 

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Take a look in the mirror. You are definitely missing what we are seeing. You blanket every advisor as the same, not just on this thread but on every thread. That obviously cannot be the case.
... perhaps you should too as that's your perception. You do realize "every" "advisor" is inherently biased and there are some who are not so honest. (And please, I'm not saying it's you.) So I'm merely pointing this out - not sugar-coating it. Or being labelled as "naive". Also, who is the "we" (other than Money###)?

Even when I suggested he buy a policy that is offered by advisors, you attacked it.
... again, your perception. What's wrong with pointing out some pitfalls in a getting a policy that doesn't meet J4B's needs? How did I attack your suggestion?

I assume that was your problem with my suggestion, but perhaps I was wrong. If I read you wrong, I apologize, but since I did and I know others have taken your attitude the same way, you might want to adjust the way to make your points in the future. Facts are a lot more useful then emotion.
... yah, I think you're wrong or perhaps having the wrong perception(s). And I agree facts are more useful as presented in my post #43 rather than your analogy of your fall-out with your ex-girlfriend.
 

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Hmmm...good to know...I need some education here.....why do they care? Are they worried about premiums not being paid? I Figured you could just ask for a policy, for example that will pay $5000 a month for up to 24 months if a disability is proven.

I wonder if folks have a hard time confirming income for insurance purposes in a similar way people have difficulties proving income for mortgages.
It has similarities. Both really, really want to sell their products, but with DI, they believe that as a group, it would be sold for a loss, if they "over-insured" that group. It is what it is. It makes sense. No one wants to sell a product at a loss. Mortgage or Insurance. Even though the premiums are large, the monthly benefits for a workers lifetime, is a magnitude larger. Work motivations play a very big role in the profitability of DI and all this comes from past claims experience.

They have all the numbers from claims, because although they will not insure a person above their income level. That insured person can have an income reduction, in the future, and no change can be made to the policy. So in effect, at that time, that individual would be over-insured and would not be their best customer at that time, but it is "non-cancellable" insurance and they cannot do much about it. If he/she goes on claim, they have to pay the full amount of what they contracted for. So they do all they can during the underwriting to protect themselves from this.

I should add, that above I said they take the last two years tax returns (CRA's NOA) to determine income, which they do. I said I was not sure whether they would average them or insure based on the lowest amount in the two years. Although, I still don't know, I would guess they would lean towards the average. It is all about motivation of the insured to work. That is what they want to see. A person, especially J4B will look at their average earnings for the benefit their occupation provides and from that, they will derive all the motivation that is possible from it. So my best guess, is they will use the average income for underwriting disability insurance. CI, they could not care less about income because there is no ongoing loss or reduction in loss. If a person qualifies for a CI claim, the claim is paid, the contract is done. Incomes do not play any role in it, so if one is declined for DI or does not get the amount of coverage they feel they need, CI is a good alternative. May even be better, that would be in the opinion of each person.
 

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I doubt the insurer will care much about my last 2 years of taxes, which were under an employer that I am no longer with. Maybe I'm wrong... do they only care what the tax returns say? I can show them tax returns with 2 years of high income. IMO not relevant to my income going forward but maybe they don't think that way.
... it's simple. They need verification or proof, like everything else. If your policy is a % of your income, then your claim is also based on that. They're not going to pay you a cent more nor are you going to insure (aka pay your premiums) a cent more than you're getting.

And you guys are talking 4K to 5K a month disability but even my professional association's insurance would pay nothing near that. The professional association quoted me a policy with max $1500 a month (due to self employment) which is why I figured DI is out of the picture.
... in this case, you're insured for a flat amount regardless of your income. But then the insurer would still want proof your income (likely your last 2 years or the most recent T4 reported) supports that amount. Ie. if you just made $12K last year, then why should they be paying you $1,500 a month x 12 = $18K? Anyhow, I think definition of earnings in the policy dictates.

Not to mention the fact that DI can be turned off once the insurer determines you're good enough to work. The benefit I see with CI is the lump sum payout, meaning you can rest and recover on your own schedule... not the insurer's.
... obviously, DI means disability income ... income replacement due to a disability meaning if you can return to work (getting an income), then you don't need the income replacement coverage.
 

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I doubt the insurer will care much about my last 2 years of taxes, which were under an employer that I am no longer with. Maybe I'm wrong... do they only care what the tax returns say? I can show them tax returns with 2 years of high income. IMO not relevant to my income going forward but maybe they don't think that way.

And you guys are talking 4K to 5K a month disability but even my professional association's insurance would pay nothing near that. The professional association quoted me a policy with max $1500 a month (due to self employment) which is why I figured DI is out of the picture.

Not to mention the fact that DI can be turned off once the insurer determines you're good enough to work. The benefit I see with CI is the lump sum payout, meaning you can rest and recover on your own schedule... not the insurer's.
If it was the same industry/occupation, I would imagine it would be relevant, if completely different you may have a problem. You never really know until you apply. As for the amounts. I cannot comment on the Association plan you cited, perhaps they have a maximum for some unique reason for them. Lower maximums would allow for lower premium per dollar insured, for the motivational reason I have already mentioned. I do know for sure, that they are willing to insure up to 85% of your after tax income. Maximums for individual plans are usually in the $20,000 per month area, if I recall and might vary depending on the insurer.

Not sure what Beaver was getting at, but once you have a contract inforce, your current income becomes irrelevant at claims time, except if you have "residual disability", which is a rider that protects you against partial disability where you are still working but suffered a reduction in your income. They need some baseline to determine how much reduction took place. Other then that, they don't care. If your doctor says that you cannot perform the substantial duties of your regular occupation, they will pay you the full monthly amount that you contracted for. Your income just before that is not taken into account, at that time.
 

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I should add, when you were told that the association plan had a maximum of $1,500 per month, was that information from the insurer or did you get that from a co-worker that had applied for it? The reason I ask, is with disability insurance Association plans are almost identical to Individual plans, in that they are individually underwritten and usually offer the same benefits, etc. If it was a co-worker I might think that they had applied for a larger amount and were told that due to past income levels, the most that person could be insured for was $1,500 per month, and they might have taken that result as a maximum for everyone, when it may not have been.
 

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Discussion Starter #67 (Edited)
That info I had was from the insurer based on a quote for me. They got all my details, age, income level, etc and then gave me that quote. It was when I mentioned self employment that the answer changed dramatically... so this has nothing to do with coworkers. My coworkers actually have better coverage, but this particular group plan sets lower $ amounts for self employed.

I still don't get the sense that DI is the correct policy for me. I'm semi retired at this point, and don't need a lot of employment income. I only work because it's kind of fun and further bolsters my financial situation. If I were to become injured or disabled there is, in fact, not much motivation to work and I can even say that now as a perfectly healthy person. If I was injured I would probably really want to rest and take it easy until I get back on my feet, not rush back to work.

If I had a heart attack for example, I guarantee you that I would take it really easy for a very long time and make sure to get excellent treatment. I would really focus on my health. I barely need to work to begin with... why would I rush back into the rat race? No. I would focus on myself for a long time. Eventually when I'm feeling up to it, I would do some minimal amount of work.

Doesn't seem like a fit for DI since the focus appears to mainly be on short term replacement of income (paying monthly bills) and the insurer wants to see people who are motivated to get back to work. I would only be interested in DI for long term disability reasons; I don't even care about short term income loss.
 

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Discussion Starter #68
More to the point, our professional association group plan sounds quite good overall (coworkers like it) but the fact they can't cover much DI suggests to me that DI is a dead end for me. The last thing I want to do is start dealing with a fleet of salespeople for no reason. I already had another insurance broker look at my situation and tell me: "quite honestly, DI is going to be very expensive for you"
 

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No problem. It is an individual issue and decision. I like DI because it kind of seperates out why you were disabled and just pays because you are disabled. You can relate it directly to income loss when trying to figure out the exact need, etc. The problem I have with CI is that some of the things they cover would cost you a fortune, if you were unlucky to get them and others would not cost you anything. Some might not even keep you away from work. It seems like more of a gamble then something that is designed to protect, where the insurance company knows the odds of that gamble much better then you do.

That said, $1,500 per month, would not do too much to replace your income and would do virtually nothing to pay for things that would help you enjoy life a little better if you were paralysed or something really ugly like that. If I thought critical illness insurance was no good at all I would have led with that in my points. It is a fine product and perhaps in your case it might even be better.

It also sounds like you are already self insured, which is the best way to deal with the need for income protection and perhaps all you really need is some compensation to deal with any added expenses that some disabilities would create.
 

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Discussion Starter #70
Happy to consider DI if I actually found more significant payouts (to really help with medical treatment), from an insurer that isn't so caught up on what my current income level is. I don't even know my own income level. It just doesn't matter to me because I expect it will average out to something reasonable over the years.
 

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If it was the same industry/occupation, I would imagine it would be relevant, if completely different you may have a problem. You never really know until you apply. As for the amounts. I cannot comment on the Association plan you cited, perhaps they have a maximum for some unique reason for them. Lower maximums would allow for lower premium per dollar insured, for the motivational reason I have already mentioned. I do know for sure, that they are willing to insure up to 85% of your after tax income. Maximums for individual plans are usually in the $20,000 per month area, if I recall and might vary depending on the insurer.

Not sure what Beaver was getting at, but once you have a contract inforce, your current income becomes irrelevant at claims time, except if you have "residual disability", which is a rider that protects you against partial disability where you are still working but suffered a reduction in your income. They need some baseline to determine how much reduction took place. Other then that, they don't care. If your doctor says that you cannot perform the substantial duties of your regular occupation, they will pay you the full monthly amount that you contracted for. Your income just before that is not taken into account, at that time.
.. it is okay you don't get what I'm getting at. But when I read your post here, 2nd paragraph, it's rather contradictory. On one end, you're saying verification (consideration) of income doesn't matter. And yet if you go back part-time, you get the "residual" "rider (aka you pay extra for, correct?)" coverage so does that mean you get the full amount of $1,500 or the part-time coverage of $750 (or whatever lower)?

As I'll re-iterate from my post #64 above "Anyhow, I think definition of earnings in the policy dictates." .... simply meaning the insurer will dictate the terms as per their policy, including occupations and clawing back your full coverage amounts. Ie. even you qualified for $10,000 per month, they'll want to claw that back via other income means (pensions, etc. as per their policy). It would have been nice if these other criterias/flipside were identified. But then again, I guess that's why some of us are on this forum trying to DIY on our finances, hopefully able to help others.
 

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Happy to consider DI if I actually found more significant payouts (to really help with medical treatment), from an insurer that isn't so caught up on what my current income level is. I don't even know my own income level. It just doesn't matter to me because I expect it will average out to something reasonable over the years.
...I would agree. Paying a claim is the key ... don't take my word - google the internet and alot of PITA stories pop up.
 

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Beav. Please for the original poster. Stop guessing at this stuff. It's a lot of money the OP is allocating and Individual Disability Insurance does not always work the way you guess it does. The basic monthly benefit certainly does not offset against pension income or investment income for that matter. It doesn't even offset against residual work income, for example, if a person was receiving royalties on software sales or something like that. It only cares whether you are still working or not.

As for their interest in his previous income at claims time, I think I explained the difference between just a basic plan and one with residual disability as an additional rider, quite well so I will leave that alone.

As for the internet. The only stories you are going to find are the negative ones. I don't think anyone would assume there would not be some problems, now and then, and hopefully they would understand that not all of those problems would not have originated from the insurance company.
 

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I should make one clarification to my post above. DI insurance does not offset against other income with one exception, if my memory holds up. CPP disability benefit. I believe they do offset against that income for two reasons. First, they cannot accommodate that income, during underwriting, because as many of us know, it has a very stringent definition of disability and much more stringent then what is found in an individual DI policy. Since a person may be disabled, from the individual policy definition and still not receive CPP disability, they ignore it when determining the maximum benefit they will offer, but add a clause stating that if you do receive it, your DI benefits within the policy will offset dollar for dollar.

The 2nd reason is as I have stated before. They are desperately trying to make sure someone who they insure will not be over-insured. They try very hard to make sure that you will not earn more money staying on disability benefits then you would if you went back to work. For this reason they do not offset against investment income, CPP retirement pension, regular pensions, etc., because you would get all those whether you went back to work or not.

Any income that would go away when you go back to work, is a demotivating factor that they need to reduce as much as they can, if they want a person to try to go back to work. For some reason, when a person is about to lose money, when they go back to work, they have a large motivation to avoid it.

The Universal Basic Income promoters should try to learn something from the insurance companies experience. They know this so well, they are willing to forego business because of this relationship.
 

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Beav. Please for the original poster. Stop guessing at this stuff. It's a lot of money the OP is allocating and Individual Disability Insurance does not always work the way you guess it does. The basic monthly benefit certainly does not offset against pension income or investment income for that matter. It doesn't even offset against residual work income, for example, if a person was receiving royalties on software sales or something like that. It only cares whether you are still working or not.
... who said the DI is offseting the pension? It's the pension(s) (meaning RRSP, private pension, CPP and more) that can offset the coverage. You got it the other way around so why don't you stop the "guessing" or supposedly offering your expertise. Or maybe outline the policy terms or the "facts" instead of accusing others of guessing.

As for their interest in his previous income at claims time, I think I explained the difference between just a basic plan and one with residual disability as an additional rider, quite well so I will leave that alone.
... unless J4B responds to this, you're just assuming you explained the difference.

As for the internet. The only stories you are going to find are the negative ones. I don't think anyone would assume there would not be some problems, now and then, and hopefully they would understand that not all of those problems would not have originated from the insurance company.
... if the problem is not with the insurance company not paying, then why don't you offer a "positive" story then. Because I don't have one - in fact, my friend went through hell trying to get an LTD claim paid.
 

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Discussion Starter #76
It also sounds like you are already self insured, which is the best way to deal with the need for income protection and perhaps all you really need is some compensation to deal with any added expenses that some disabilities would create.
I am thinking along these lines, yes.
 

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... As for the internet. The only stories you are going to find are the negative ones. I don't think anyone would assume there would not be some problems, now and then, and hopefully they would understand that not all of those problems would not have originated from the insurance company.
... if the problem is not with the insurance company not paying, then why don't you offer a "positive" story then. Because I don't have one - in fact, my friend went through hell trying to get an LTD claim paid.
One positive and one that it was work but was ultimately positive in this article. https://www.theglobeandmail.com/globe-investor/retirement/retire-health/is-critical-illness-insurance-worth-it/article28195723/

The first time I heard of CI insurance was a positive only article but it's now showing as the bias is to more recent articles with a lot being a mix of advisors comments with a summary of critical comments.


Cheers
 

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^ That's CI ... try finding a positive one on LTD or DI. Good luck.
When the benefit is paid on time, people rarely complain.

Nothing surprising in the article. My aversion to CI is simply the fact that they are a little too specific on what constitutes a claim. A claim which has no direct relationship to need or income.

That said, the individuals that suffered those specific ailments are obviously quite happy they had the coverage. Perhaps they may have preferred the claims experience to have gone better but I doubt they regretted buying the policy.
 
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